Why Pandora Radio has employees in Minnesota

February 27, 2015

As online radio streaming lured more and more listeners, industry leader Pandora Media Inc. ramped up its competition against local radio and television stations for advertisers. It even has a small office in Minneapolis.

Oakland, Calif.­based Pandora has seven people — four sales reps and three client­services reps — at the Campbell Mithun Tower in downtown Minneapolis.

I recently chatted with Gabe Tartaglia, a Pandora regional vice president who is based in Chicago, about the company’s local presence.

First off, how long have you had operations in Minneapolis?

We’ve actually been doing business in Minneapolis for three or four years with some of the larger clients like Target and Best Buy, but we’ve done that from Chicago. In the past six months, we’ve started to put sellers in that market to call on those existing accounts and, of course, to expand into the local media market.

Tell me about the Pandora’s local growth.

Minneapolis is a great market for us. It’s actually right in line with some of the earlier local markets that we’ve gone into. We’re currently in 29 of the Top 40 media markets around the United States. What we’ve been able to do is have our local sellers go in and compete against some of the larger local radio and television stations for business with bread­and­butter local advertisers that you would expect — auto dealers, health care services, education, retail and that kind of thing.

Who are your top local advertisers?

Automotive is our biggest category. Currently, we have about 10 different local dealers. Some of the bigger ones are Maplewood Toyota and Morrie’s Minnetonka Kia. In health care, we do a lot of business with Park Nicollet. In education, which has been really fantastic, we do continuing ed business with the University of Minnesota and also Globe University.

How does your advertising platform work? How does that compare to other localbroadcast outlets?

The key differentiator is that if you’re listening to Pandora, you register by telling us your age, gender and zip code. That allows us to do very finite targeting for a media campaign. So, if a local advertiser wants a very custom geography or wants to reach an exact age or gender, we can provide that exact demographic with 100 percent guaranteed delivery and zero waste. That’s different from broadcast television or radio, where you’re sending it out to the entire market, and depending on the format, they may know generally who’d listening, but they can’t tell exactly the way we can with our listener registrations.

How do your rates compare?

On the digital side, we do compete on a cost­per­thousand basis, but on the radio side the past couple of years, we’ve been able to compete on a cost­per­point basis by converting our impressions into radio points. It’s actually gotten so integrated now that we’re inside the agency buying systems like Strata, Donovan and Mediabank, which allows buyers to look at our ratings like we’re a big radio station in the market and actually buy us on the same cost metric that they would for any other terrestrial station. And our rates are generally pretty competitive. Obviously, we have to earn our way onto the business, so they have to be.

Pandora positions itself as the No. 2 radio station in Minneapolis based on cumulative listenership. How do prospective clients respond to that?

If they haven’t been following Pandora’s growth, they’re probably surprised and we do need to walk them through the Media Audit results. But if they’ve been a partner with us and seen our growth, they’re not surprised because there has been a huge shift in radio listening from terrestrial radio to Internet streaming, and Pandora really has been the lead competitor in that space. We’ve got over 700,000 listeners in the Minneapolis DMA every month, and every week, if you take a demographic like adults between 25 and 54, we have about 400,000 listeners. That kind of scale allows us to compete as if we were the No. 2 radio station in the market or even up against some of the television stations.

How does the technical aspect work for placing ads to hit the intended audience?

The key is to just think about it in terms of the individual listener, not the genre of music they’re listening to or a particular artist. Most advertisers want the person. They want the consumer who can hopefully become a potential customer. So, if a person is listening to a rock station and then changes to a country station, to us, that’s one listener and we can still serve the same targeted adds to that person, which is the most important thing to the advertiser. We’re really proud of the results that we try to get for our advertisers. Because of our targeting and the fact that the ad is a forced listen, it means the ads work better. We do have some success stories who have tried us, and it worked so well that they expand. A perfect example is New Horizon Academy child­care centers. They started, like a lot of local advertisers do, with a small campaign. It worked so well that they’re now not only doing it chainwide for Minneapolis, but they’ve also added some of their periphery markets like Rochester and St. Cloud to it to make Pandora a core piece of their marketing mix. That’s a pretty typical experience.

How does that work when my 2­year­old daughter is listening to the Raffi station on my iPhone?

If you’re listening to a kids­oriented artist or one of our family genres, but you sign in as a 30­ year­old man, we’re still going to serve the ads to you. Now, there are some advertisers who will do some genre­specific advertising. An example, might be Huggies. They would advertise on that family genre to exactly that woman who is 25 to 40 years old because if she is listening to toddler rock, she’s more than likely a mom with a kid in the room who might need diapers.

Do you expect to grow the local office over time?

Obviously, with the business growth and as big of a media market as Minneapolis is, we could see our staff growing. But Pandora’s growth is very deliberate. For example, we wanted to make sure we built the listener base here before we opened an office here. Now we’re making sure that those sellers who are up here are really doing good business — that they’re doing good business and their customers are satisfied — before we start adding more. But, eventually, could we add a few more heads? It’s certainly not out of the question.

How does Minneapolis rank among Pandora markets for listenership?

As a market, I think Minneapolis is about 16th in population. A few years back, you would have seen some of these central, Midwest markets indexing below average for Pandora listeners because it really started on the coasts. But now the integration in day­to­day life, whether you live in Minneapolis or Nashville, Tenn., or New York or Los Angeles, it’s all roughly the same. We’ll typically have roughly 20 or 25 percent market penetration in any market, and Minneapolis is right in that range.